Meat workers’ struggles at Talley’s AFFCO

Meat workers’ struggles at Talley’s AFFCO

Since 7th September up to 150 New Zealand Meat Workers Union members at AFFCO’s Wairoa shed have been refusing to sign draconian new Individual Employment Agreements (IEAs) that AFFCO are making a condition of re-employment at the plant in the new season. This is the latest epsiode in a long running saga of bitter industrial conflict at AFFCO (Auckland Farmers Freezing Company) since that company was taken over by the Talley’s Group in 2010. Already, union members at three other AFFCO sheds, Rangiuru, Imlay and Manawatu, have signed these IEAs, rather than lose their employment. The NZMWU lost an Employment Court bid in June to impose an interim injunction on AFFCO arguing that the employer’s take-it-or-leave-it offer to its long term employees returning in the new season constituted an illegal lockout. Union members at these sheds made a collective decision to sign the IEAs and maintain their union membership and ability to fight the employer on the inside.

The collective agreement between the NZMWU and AFFCO expired on 31st December 2013. Despite the union initiating bargaining 60 days prior to the CEA’s expiry date initial negotiations did not take place till February 2014 due to employer stalling. The union’s major claim was for a 2-year deal with a 5% increase in the first year and 2% in the second year. AFFCO demanded major concessions: a half-hour increase to the ordinary working day, slashing the minimum weekly pay from $536.18 to $400, an end to the meatworkers superannuation scheme, halving accumulated sick leave limits, and cutting shed-negotiated overtime rates by as much as 34%. For this insult they offered 0.5% in each year of the agreement. Unsurprisingly bargaining stalled. As well as a core CEA covering all AFFCO sheds there are also shed-level agreements negotiated over and above the core collective. Normally the core collective is negotiated first before moving on to shed-level bargaining, however, this time AFFCO insisted on negotiating shed by shed before it would agree to negotiate again over the core collective. As the CEA expiry date reached its 1-year anniversary the workers reverted to IEAs based on the conditions in the collective. AFFCO were successfully stalling the settlement of a new collective. By this stage the union had dropped its claim for a wage increase and was simply calling for the CEA to be rolled over for another 2 years without change. AFFCO dropped their demand to axe the superannuation scheme, and shortened the period it would pay the reduced weekly minimum to the off-season from June to October. Otherwise their demands remained the same.

In February 2015 AFFCO tabled 8 additional claims, deliberately vexatious to the point of absurdity, including a claim that the union indemnify the company for any penalties it receives for breaching employment law in its plants! Such new claims, tabled over 12 months since the CEA expired, could only be being made to further stall negotiations and allow AFFCO to take advantage of the recent amendments to the Employment Relations Act that allow employers to apply to the Employment Court to have bargaining declared at an end. Sure enough, AFFCO has become the first employer to seek to take advantage of this new provision in the law that came into effect in March this year. After a mediation on 23rd July AFFCO added a further claim to the table that effectively nullifies seniority, the established principle of ‘last on, first off’ that gives meatworkers a degree of job security and progression.

Solidarity picket of the Affco Wiri plant during the 2012 lockout

With negotiations deadlocked NZMWU members voted 94.3% in favour of 2 days’ strike action that would have taken place on 10th and 11th August. Rather than mount picket lines at the plants though the union planned to have workers bus to Wellington during the strike for a lobby of Parliament. Quite what this was supposed to achieve is not readily apparent. Then, at the proverbial last minute, the strike was called off. The shed presidents had been convinced to call off the strike by the intervention of iwi leaders, Tuku Morgan and Ken Mair. With over 80% of AFFCO workers being Māori, iwi have been actively involved in the dispute providing welfare for their members and have previously played a high level negotiating role as they are significant owners of stock that meat processing companies compete for. An accurate account of what happened at this meeting is difficult to come by but seemingly Andrew Talley told the shed presidents that the company would never negotiate a deal with the NZMWU and the iwi leaders proposed to help by setting up a new union, a company union, to deal solely with AFFCO. Shed presidents agreed to call off the strike as a sign of good faith with the understanding that iwi leaders be given 2 months to try to broker a deal with AFFCO. Calling off the strike at the last minute led to a great deal of confusion amongst union members and supporters. $7000 in donations to the strike fund already raised through online funding site Givealittle had to be refunded. The accusation that the shed presidents had agreed to the setting up of a yellow union was denied and nothing along those lines has eventuated in the following weeks. The following weeks saw a hui in Taupo attended by union members from all the AFFCO sheds, CTU officials and officials of other unions but little sign of action until members at Wairoa refused to sign the new individual agreements.

The intervention of iwi leaders brought a resolution to the dispute during the last negotiations for a collective at AFFCO. In February 2012 workers were locked out for 84 days after 10 days of negotiation. The Talleys wanted unilateral control over manning and tally rates, the right to fire workers with no justification, removal of seniority, and so on. Rather than lockout the whole workforce Talleys selectively locked out specific employees leaving some union members to continue working alongside non-union members and enabling the company to continue processing. The union then called those workers out on strike, intermittently at first, and then indefinitely after 12th April. The lockout was ended after pressure from some iwi leaders who threatened to withhold stock from iwi-owned farms if AFFCO did not come to an agreement. Iwi leaders were directly involved in mediating and negotiating the final agreement which, although it managed to include a reasonable wage increase and retention of seniority, removed the need for union agreement regarding manning levels and tally rates. According to a MWU bargaining update from 10th March 2014 the collective agreement negotiated in the wake of “AFFCO’s lockout achieved for AFFCO extreme flexibility in manning/tallies/payments which now would match opposition processors prodictivity with in many cases lower wages.” The intervention of iwi prevented a complete rout of the union at AFFCO but it did not stop a real defeat for the workers there. Some industry analysts did not view the threat of withholding stock to be a real one, instead seeing the already established business relationship between iwi and the Talley family as the basis of the Talleys’ willingness to accept them as intermediaries. Much was said at the time of a new dynamic at play with iwi willing to exercise their growing economic power to benefit Māori workers. The iwi intervention was supposed to lead to an ongoing relationship with the CTU Runanga to advance the interests of Māori workers. This would seem to lead to the question as to why iwi took so long to intervene again the second time round. Despite the company’s obvious stalling and union-busting behaviour iwi leaders seemingly only intervened well after the collective had lapsed and a strike was imminent. Of course it is possible they have made attempts to intervene before then and been rebuffed but then why not wield their economic weapon of withholding stock before the union’s situation had deteriorated to such a serious extent? These are serious questions and point to the inability of such alliances to overcome the fundamental class antagonism of capitalist society that divides Māori as much as Pakeha.

Since it’s full takeover of AFFCO in 2010, Talley’s Group has been pursuing a de-unionisation strategy intended to bring AFFCO into line with the rest of its agribusiness operations, one that would give it the edge in competing with its larger market rivals. Talley’s Group has interests in meat, dairy, fish and horticulture and employs roughly 4500 workers. It has a well-earned reputation as a hard-nosed union busting company. AFFCO is the only part of the group that has any well-established union presence. A few months prior to the enactment of the Employment Contracts Act Talley’s quickly moved to attack unions in its fish-processing plants. Two awards governing Talley’s Fisheries expired just before the Employment Contracts Act (ECA) was enacted in May 1991. Talley’s ceased to honour the clauses relating to the union which then became part of workers’ individual agreements based on the expired awards. It refused to deduct union dues, allow stopwork meetings, refused access to union officials, etc. Talley’s ignored the rulings of the Employment Court and used standover tactics to force union members to sign new individual contracts removing reference to the union. This behaviour earned Talley’s the merit of being the first employer to be found ‘harsh and oppressive’ under Section 57 of the ECA.

In 2009, an 8-day strike by the New Zealand Dairy Workers Union at Open Country Cheese (of which Talley’s own a controlling share) in the Waikato was responded to with a 6-week lockout notice. The lockout was found unlawful by the Employment Court so the company suspended the union members instead and stepped up their repression, sacking some of the delegates and beginning a major restructure. As well as the lockout the company illegally brought in strikebreakers from another plant near Invercargill. Even though a collective agreement was eventually settled at the company most of the unionised workforce chose to leave rather than remain employed under such oppressive conditions. I’m unsure whether the NZDWU still has a presence at Open Country.

AFFCO closed down the sheepmeat chain in Wairoa in June 2010 after only 3 weeks work effectively locking out 100 workers for the rest of the season. The company had threatened the union that unless productivity increased the chain would close. The next year one of the country’s most advanced lamb processing chains was installed in the plant. This high-capacity chain replaced two older chains and allows a processing speed up to 10 lambs per minute, the highest rate in the country. Throughput is the single most important determinant of profitability in the meat industry with plants needing to operate between 70 to 100% capacity in order to be profitable.

Talley’s Group took over full control of the previously publicly-listed company buying out all remaining shareholders in November 2010. Since Talley’s became a majority shareholder in 2006 AFFCO has invested around $375 million upgrading and modernising plant. This considerable investment has been made against a background of substantial overcapacity in the meat processing industry. Stock numbers have been on the decline for two decades, accelerating with the massive expansion of the dairy industry and the conversion of traditional sheep and cattle farming areas to dairy. Since 1990 stock numbers in sheep have declined by a massive 47% and beef cattle by 19%, whereas dairy cow numbers have increased by 88%.

The situation in the red meat industry now is very similar to what it was in the 1980s, a decade of massive change in the industry with overcapacity then being met with the closing down of many large urban works, technological change (e.g. the introduction of pelting-pulling machines and inverted dressing), mergers, speed-up involving increased tallies and manning cuts, the lengthening of the working day, and the move to shift work. Although there had been some shiftwork in the cutting and boning operations of New Zealand Refridgeration Co. in the 1970s, it was not introduced on a large scale until the late 1980s and only after a long national strike – eight weeks in Auckland and six weeks in the rest of the country. The strike ended with an agreement that more or less met the wage demand but on the basis of allowing shift work in lamb cutting departments and a clause on the introduction of new technology. Shift work on the slaughterboard was first introduced in 1988 with Fortex’s Seafield plant near Ashburton. Fortex’s manager Graham Thompson initially tried to introduce shift work without union agreement. After mass picketing and an Employment Court judgement, Fortex came to an agreement with the union allowing it to run its plant 22 hours a day, 6 days a week. Through shift work and the changes to conditions wrought by mass unemployment and the Employment Contracts Act, employers have been able to utilise their fixed capital to its fullest extent.

The current overcapacity in the meat processing industry has been the subject of heated debate in the business pages of the press and industry journals for some years. There have been many calls for consolidation and the closure of excess plants. A 2014 report titled, The Size of the Prize : NZ Export Meat Industry Reform, by professional services consultancy GHD, that was commissioned by the Meat Industry Excellence group (a self-described “grassroots farmer organisation” set up to reform the sector), recommends the closure of 13 ovine plants and 6 bovine plants. The consultants believe this rationalisation would lead to annual savings of $215 million and note that NZ processors currently have “enough capacity to kill everything twice”. The Meat Industry Excellence report, Red Meat Industry : Pathways to Long-Term Sustainability (March 2015), discusses various scenarios that might deliver a large reduction in overcapacity of the kind talked about in the GHD report and the likelihood of the 4 major players involved in the industry taking part.

As in 1985 when another consultancy firm, PCEK, recommended a reduction in capacity of between 35 and 40%, there has been no consultation with the workers or the working class communities where the sheds are situated. In the 1980s several large battles were fought by the New Zealand Meat Workers Union and the Auckland and Tomoana Freezing Workers Union to obtain decent redundancy agreements for workers sent down the line due to the avalanche of closures (between 1986 and 1990 a workforce of 31,000 was halved) including rolling stoppages by workers at 12 Waitaki-owned plants in support of a redundancy agreement for the 1500 who lost their jobs with the closure of the Whakatu works at Hastings, and a 12-week strike by 1200 workers at the Westfield plant in Auckland. Workers strongly resisted demands for concessions. At the militant Longburn shed near Palmerston North, the bosses demanded concessions including wage cuts, a 25-minute extension to the working day, an increase of 300 animals a day on each chain, and workforce cuts of 145 people. The workers refused to accept, leading to a 3-year lockout that was only resolved when AFFCO bought out the works and closed it down for good in 1989. The employers offensive in tandem with the 4th Labour government’s 1987 Labour Relations Act and the top-down corporatist partnership strategy of the CTU severely weakened the unions’ ability to fight though and the national award began to disintegrate. The closure of the large well-organised urban plants with militant rank and file union traditions and the opening of newer ‘greenfields’ plants with largely inexperienced employer-vetted workforces led to a steep decline in the militancy of meat workers as they adjusted to the new industrial relations regime in the 1990s. It is highly doubtful that meat workers today would be able to put up a similar kind of resistance to such a brutal closure program as they did in the 1980s. Indeed the NZMWU organiser Roger Middlemass endorsed closures in the NZ Farmer in October 2014 if they led to more stable employment for the remaining workforce. I believe that similar arguments were made back in the 1980s.

With the sale of a 50% stake in NZ’s biggest meat processor, Silver Fern Farms, to Chinese firm Shanghai Maling, part of the Bright Food group, the likelihood of any rationalisation of the meat processing industry has been deferred for the time being. The chairman of the Meat Industry Excellence group, Peter McDonald, resigned recently stating that he did not think MIE had a clear and achievable goal any more. The 2nd biggest processor, Alliance, has recently announced the introduction of $15m worth of labour-saving robotic cutting technology, produced by Dunedin firm Scott Technology, to its boning rooms in Pukeuri and Smithfield. Intensified competition in the industry will continue to be the reality in the industry for the near future.

Talley’s bid to de-unionise AFFCO would allow it even greater control than it has already achieved in the wake of the last lockout. The consequences for workers are extreme. Talley’s is aiming for complete control over chain speeds, manning and tallies. Seniority will be lost, replaced with ‘performance’ based job allocation. Control will be exerted through the compulsory disclosure of medical and ACC records. All risk will be transferred to the workers. Talley’s Group already has a disgraceful health and safety record that only stands to get worse should they get their way. De-unionisation at AFFCO will have consequences for the rest of the unionised meat processing industry in New Zealand. Companies currently considered ‘union-friendly’ by the NZMWU officials may quickly become less friendly if they lose an equal playing field on labour costs with AFFCO and will end up taking a more hardline approach to industrial relations. The weakness of the current union is shown in the inability of union meat workers in other companies to take action in solidarity with the AFFCO workers, even though their own position will be severely weakened if AFFCO is de-unionised. At the moment the situation is really dire as workers in the other AFFCO sheds are leaving the Wairoa workers isolated to fight alone. The union’s hopes seem to be placed on the outcome of October’s court case that will rule on whether seasonal workers are in continuous employment and hence whether AFFCO have imposed an illegal lockout on the workers who have refused to sign new IEAs in order to return to work. If the decision goes the wrong way it is hard to discern what the union’s next move will be. If the union is busted at AFFCO then the road will be open for the other meat processors to sideline the union. Yes, Talley’s are particularly nasty employers but the union’s approach of demonising them in contrast to their more ethical competitors is counter-productive, as all these firms operate in a marketplace where maximising profit is the overriding factor determining production decisions and this will be the ultimate determinant over what happens to the industry in the future. A key export industry, the meat processing industry is a strategic industry for private sector unionism in this country. At a time of new lows of private sector unionisation the union movement can ill afford to lose this fight.